Tuesday, 6 September 2016

Shaking off the Brexit blues

During the referendum this blog made the case that Brexit would probably cause a temporary recession but would bounce back and we would be better off for it. Amidst the grim prognostications I took the view that we would most likely settle upon a single market based exit meaning the disruption would be nothing close to what was predicted. I remain reasonably certain that an EEA based Brexit is not the catastrophe remainers seem to think it is.

The only leap of faith I made was that logic and reason would prevail when faced with the prospects of the alternative Brexit models. The mistake in this thinking is believing that Tory Brexiteers are capable of acknowledging reality even when it is spelled out to them slowly and patiently. Recent experience shows this to be overly optimistic.

It has oft been said that the reason Richard North is not heeded among Brexiteers is because he's a big meanie to the toryboys, but it turns out it's because nearly all of them to a man are bigoted shitheads who have never had any intention of modifying their views regardless of how stupid they are. There are only so many ways we can point out that the WTO option is moronic before you have to acknowledge that you're not dealing with people capable of reason.

This has of late caused some considerable depression in The Leave Alliance corner. If it comes down to a choice between a Tory hard Brexit and no Brexit at all I would opt for no Brexit, depressing as that is. But just because John Redwood et al are bigoted and ignorant shits does not mean our many tiers of government are going to roll over and allow them to wreck the country. Sooner or later sense will prevail as the options close themselves down.

This week eureferendum.com is looking into the system of Authorised Econmic Operators as mentioned by the Japanese in their request to the UK government for Brexit caution. This is one of the many mechanisms which facilitates faster and cheaper trade.

Under AEO, each participant involved in global trade (e.g. importers, exporters, shipping agents, customs brokers and warehouse operators, etc.) can enjoy the benefit of preferential treatment from customs authorities. Some of these benefits include expedited clearance times, less examinations, improved security and communication between supply chain partners, etc.

Mutual recognition of AEO status is a key element to strengthen and assist end-to-end security of the supply chain and to multiply benefits for traders. The objective of mutual recognition of AEO status is that one customs administration in one country recognizes the AEO authorization issued under the other program and agrees to provide substantial, comparable and, where possible, reciprocal benefits to the mutually recognized AEOs. 

Under the Mutual Recognition Agreements (MRA), the customs authority of exporting countries ensures the safety and authenticity of export shipments before export and the customs authority of the importing country ensures the preferential customs treatment for AEO certified entities at time of import.

Should we leave the single market we do not automatically inherit agreements between the EU and third countries on mutual recognition of customs standards and inspections. That means that in order to ensure trade continuity we have to have all these MRAs negotiated and ready to go before the end of A50 talks otherwise trade literally grinds to a halt. Presumption of continuity does not necessarily apply.

Because we would need them quite urgently it could be a seen as an opportunity by third countries to seek concessions from us. So we will either need a pretty nifty strategy to keep ahead of the game or we will need to join Efta. This is a concept the Brexiteers have not even heard of and think just an agreement on tariffs is all we need to leave the EU. This is why I am not standing around waving placards grunting "invoke Article 50 now". I would like for the government to at least acknowledge the existence of such issues first.

Hitherto now we have mainly spoken of MRAs in reference to standards. We fully expect that would not present much of an issue since we already comply but if our government chooses not to join Efta (for no tangible reason) and we do choose regulatory divergence (for no tangible reason) we will have to have in place an MRA on non-harmonised goods

There is absolutely zero obligation for the EU to grant us one and if the French have defensive interests (being more powerful in the EU by way of Brexit) they will most likely decline. We cannot reciprocate as we will have established an agreement whereby EU goods meeting EU standards (ie all of them) can be imported. Protectionist measures taken by the EU would be lawful - but not if the UK does it. All in all, leaving the single market would be a pretty stupid idea unless you have the mother of all trade strategies with third countries. Which we don't. We have John Redwood grunting about "free trade deals".

Day by day more is added to the mountain of evidence that suggest the WTO option is simply not an option and there is no default model for trading without extensive agreements with the EU and replacement agreements we otherwise enjoy by proxy. The fact of the matter is that our trade boffins will be looking very closely at signals from Japan and the USA and reading between the lines. It will rapidly become clear that we lose all of our preferential customs arrangements globally by dropping out of the single market which will massively harm our export competitiveness. That can only lead to massive job losses. This is not a matter scaremongering. In this game, this is as close to fact as fact gets.  

In this, Mrs May is not stupid. She knows full well her Brexit boys are complete morons incapable of getting their ducks in a row and will be running all recommendations past trusted advisers. In this she will not even seek the input of Brexiteers. She will be asking KPMG. And they will say roughly what we have said. Fuhgeddaboudit. 

So really this blog just needs to keep the faith a little longer. Just because the Toryboys couldn't find their backsides with both hands does not mean their stunted and ridiculous ideas will shape Brexit and there is every reason to believe the deductive process will lead to one conclusion only. Maintain the single market or abandon the whole enterprise. Since the latter would be suicidal for any government, it looks like an EEA settlement is the inevitable destination. 

In this though I think it's safe to say Flexcit is dead - or at least on hold. The political system is impervious to different ideas and with Brexiteer "allies" like the Toryboys there is zero chance we can expect a different approach post-Brexit. In all likelihood Mrs May will use the EEA to park the issue of Brexit to return as quickly as possible to a state of business as usual where everybody goes back to moaning about the usual hobby horses. 

Ukippers and Toryboys will piss and whine about it but this is what you get for having an intellectually bankrupt movement who outright reject the notion of a Brexit plan. So we must bide out time. For the time being the job is to keep hammering nails into the WTO option and point out that a bespoke deal is equally pointless. Once we are out of the EU and into the EEA we will then have to start over at square one and build a new movement to take us the rest of the way. With any luck the Brexiteer deadbeats will be out of the way and we can build on those who can see the EEA for what it is. Half a job. If we want to complete the process we will once again have to force the issue from the outside. 

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